Natural Gas Price Outlook

Natural gas prices continued to rally throughout most of October following strong gains in the previous month. On 17 October, they peaked at the highest level since the end of January, before falling somewhat in the second half of the month. The increase reflected strong demand due to colder-than-average temperatures, and exceptionally low gas storage levels heading into the winter season in the Northern Hemisphere. On 2 November, the Henry Hub Natural Gas price was USD 3.28 per one million British thermal units (MMBtu). The price was 3.7% higher than on the same day in the previous month and was up 11.2% on a year-to-date basis. In addition, the price was 11.9% higher than on the corresponding date in 2017.
Natural gas prices were again buttressed by the bleak level of inventories, which reached their lowest point in over a decade by the end of October—which usually marks the start of winter season and the depletion of gas stocks. This was due to a relatively cold spring and hot summer in the U.S., which caused a lower-than-average inventory build-up during the injection season. In addition, recent weather forecasts indicated colder-than-average temperatures throughout November, providing additional price support as heating demand is expected to increase.

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